Internet Commodity Trading System Liquidity Pooling
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Solution Overview
Problem
Current commodity trading systems, particularly over-the-counter (OTC) physical and derivative markets, face challenges in efficiently pooling liquidity and streamlining transactions across multiple groups, leading to fragmented liquidity and inefficient workflow due to reliance on traditional phone-based systems and lack of internet integration.
Innovation Solution
A system that enables commodity trading over the Internet, allowing users to post, view, and negotiate bids and offers on designated websites, with a unified database for sharing commodities and user-specific transaction parameters, enabling control over bid and offer actions, and facilitating both firm and non-firm transactions through a computer-based platform with internet connectivity.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Quantity of substance
If multiple groups form separate trading systems to pool liquidity for specific commodities, then liquidity for group-specific commodities is improved, but liquidity for common commodities is drained by splitting the pool amongst multiple groups
Solution Approach 1:
The patent merges multiple group-specific trading systems into a single unified trading system accessible via the Internet. This consolidation allows all traders to access a common liquidity pool for all commodities including those common to various groups, eliminating the liquidity drainage effect of fragmented systems while maintaining the ability to specialize in specific commodity groups.
Solution Approach 2:
The unified trading system provides universal access to all commodities and functions across different trading groups. Traders can access and trade any commodity through a single platform, making the system multi-functional rather than group-specific, thereby pooling all liquidity into one accessible reservoir for all participants.
2Productivity
If traditional phone-based systems are used for OTC commodity trading, then existing trading workflows are maintained, but transaction efficiency and accessibility are limited
Solution Approach 1:
The patent replaces the mechanical phone-based trading system with an electronic Internet-based platform. This substitution allows traders to post, view, and negotiate bids and offers electronically through web browsers, dramatically improving transaction efficiency through automated matching and enhancing accessibility by allowing remote participation without requiring physical presence or telephone equipment.
3Productivity
If a unified Internet-based trading system is implemented, then liquidity pooling and transaction streamlining are improved, but system complexity and implementation challenges increase
Solution Approach 1:
The patent segments the unified trading system into modular components including separate databases for different commodity groups, individual user profile management for each trading group, and standardized communication protocols. This segmentation allows the complex unified system to be implemented in manageable modules while maintaining overall integration and liquidity pooling capabilities.
Data Source
AI summary
A system for trading commodities and the like comprising a computer, a communications link between the computer and the Internet, a database, accessible by the computer, containing a plurality of user files wherein each of the user files contains a plurality of transaction parameters corresponding to one or more indications associated with the user file. The transaction parameters govern the presentation and acceptance of indications associated therewith. The system further includes a database, accessible by the computer, containing a plurality of indications wherein each of the indications contains information corresponding to open bids or offers for commodities, and an indication selection submitted by a user over the communications link. Software executing on the computer receives the indication selection, retrieves an indication corresponding to the indication selection from the indication database, queries a user file in the user database corresponding to the indication to determine transaction parameters associated with the indication, and presents the indication to the user in accordance with any determined transaction parameters.